TurboTax taxing exempt Foreign Income

[rnad]

My foreign income is exempt. yet Turbo tax shows that I owe more taxes after I've inputted it into TurboTax. That can't be right. Why is that happening?

[pk]

@rnad , while there is no clean and standard method  in TurboTax to recognize foreign "Non-Taxable" income,  please can you clarify

(a)   what type of foreign income are you talking about  ( Foreign equivalent of Social Security, Govt. pension or what )

(b) your own immigration status ( Citizen/GC or what ?)?

(c) Foreign income from which country  ( generally this is asserted in a tax treaty )?

(d) Is this your first year, asserting this treaty condition ?

Please answer my questions.    I will circle back once I hear from you --yes ?

In the meantime , is there more I can do for you ?   You can add to this thread or if you want to be away from public eye, you can PM me  ( just NO PII -- Personally Identifiable Information ).

[rnad]

(a)   what type of foreign income are you talking about  ( Foreign equivalent of Social Security, Govt. pension or what ) Income working overseas for a foreign country

(b) your own immigration status ( Citizen/GC or what ?)? Citizen

(c) Foreign income from which country  ( generally this is asserted in a tax treaty )? Sweden

(d) Is this your first year, asserting this treaty condition ? No

[pk]

@rnad , if I understand you right --

1. you are a US Person, with a foreign ( Sweden ) tax home.

2. You are /were working for a local entity ---( or did you really mean working for a foreign govt.?)

3. You now want to take advantage of  FEIE  ( Foreign Earned Income Exclusion).

4. To achieve this  exclusion ( up to maximum allowed for the year),   you have meet one of two tests--------  Physical Presence Test or Bona-fide-Resident.  Most people , who are present temporarily use the Physical Presence Test.

5. Physical Presence  -- you have to be away from the US for 330  total days in test period  of 12 continuous months encompassing the earning period to be excluded.   Thus  for example  you entered the foreign country on 07/01/2025  , then your new tax-home start date is 07/02/2025 ( first full 24 day in the foreign country ).  So to exclude  your earnings in the foreign country from 07/02/2025 through 12/31/2025, you need a test period of 07/02/2025 through 07/02/2026.  You file your return once you have met the 12 month and thereby exclude  your foreign  income and other  costs  paid by employer (like housing, cost of living adj., school help etc. etc. )  up to a total excludable amount per year.

 6.  In TurboTax , you enter your foreign earned income  as follows:  under  personal income tab, choose  ( I will choose what I work on", then from "Other misc. income" category select  " Foreign Earned Income", this will then walk you through filling out the form 2555 and also enter the  income and the exclusion amount.

Is this what you are talking about?  Does this make sense ?

Do you need more help on this ?

[rnad]

More help? You haven't answered my original question:

Why would my taxes increase after entering excluded foreign income when my only other income is from capital gains? 

[pk]

@rnad , sorry for the mis-communication .

Are you using  FEIE ?  Or are you suing FTC ?

If you meet the form 2555 requirements to exclude your income, and you entered the foreign income in the correct place , then your Foreign Earned Income should have been excluded.    I cannot see your screen and so depend totally on your answers.  

Where am I missing the boat ?